International Energy Agency’s (IEA) recent annual world energy investment report shows that the global energy investment continues to decline for the second year in a row in 2016, due to the continued drop in upstream oil and gas spending
In spite of an increased spending on energy efficiency and electricity networks, the continued decline in the oil and gas sector led the worldwide energy investment fall by 12 per cent in 2016.
The investment across the global energy sector amounted to US$1.7tn in 2016, which is 2.2 per cent of global GDP.
In 2016, global electricity spending exceeded the combined spending on oil, gas and coal supply for the first time. Also, the share of clean energy spending reached 43 per cent of the total supply investment, which is a record high, says the report.
Dr Fatih Birol, executive director at IEA, said, “Our analysis shows that smart investment decisions are more critical than ever for maintaining energy security and meeting environmental goals.”
“As the oil and gas industry refocuses on shorter-cycle projects, the need for policymakers to keep an eye on the long-term adequacy of supply is more important,” he added.
According to the report, China, being the world’s largest energy investor, marked a 25 per cent fall in coal-fired power investment in 2016. The US saw a sharp decline in oil and gas investment, accounting for 16 per cent of the global spending. India was projected as the fastest-growing major energy investment market in 2016, spending up 7 per cent, aiming to modernise and expand its power sector.
Global electricity investment was nearly flat at US$718bn in 2016, with investment in renewable-based power capacity falling 3 per cent to US$297bn. The investment in energy-efficiency rose by 9 per cent to US$231bn with China accounting for 27 per cent of the total investment in 2016.
After two years of decline, global upstream oil and gas investment is expected to stabilise in 2017.
However, an upswing in US shale spending in contrasts with stagnation in the rest of the world signals a two-speed oil market, according to IEA.
IEA further adds that the overall oil and gas industry is also transforming itself by delivering large cost savings and focusing more on technology development and efficient project execution.
